Synergies Abound in Overland Storage’s Acquisition of Adaptec’s Snap Server Product Line

A few months ago when I spoke to Jeff Graham, Overland Storage’s Senior Product Manager, he indicated that Overland Storage was exploring the possibility of adding NAS as an option to its disk-based backup line. Based on this morning’s announcement that it has acquired Adaptec’s Snap Server NAS line of products, it is obvious that Overland Storage saw an even more urgent need to add NAS to its product portfolio than Jeff originally indicated.

But is the Snap Server NAS line of products the right acquisition for Overland Storage to make? It’s no secret that Adaptec has had this line of products on the market for at least a couple of years. TechWorld reported as far back as July 2006 that Adaptec was allegedly seeking to “offload” this entire division so it could focus on its core ASIC and HBA disk controller products. Even prior to that in 2003, Quantum apparently had the same mindset before it sold it to Snap Appliances which was in turn acquired by Adaptec. Further, with Microsoft Windows Storage Server having a reputation as a solid performer in the SMB NAS market, why not just partner with Microsoft and go down that path?

To answer those questions, I briefly caught up with Overland Storage’s President and CEO, Vern LoForti, and VP of Marketing, Ravi Pendekanti. LoForti admitted that Snap Server has to a certain degree “floated” ever since Adaptec acquired it as part of its Snap Appliance acquisition back in 2003. At the time, Adaptec envisioned changing its focus from providing components to becoming a solutions company. However by 2005 that strategy had changed again and left the Snap Server product line on the inside of Adaptec looking to get out.

Adaptec made several attempts to sell Snap Server over the last few years but it only gained Overland Storage’s attention after Eric Kelly, the former CEO of Snap Appliance, joined Overland Storage’s board of directors in November 2007. Shortly after joining the board, Kelly privately informed LoForti that Adaptec was once again (still?) looking to sell its Snap Server product line and that it could help fill the NAS hole that Overland Storage had in its product portfolio.

This information prompted Overland Storage to more fully investigate if Snap Server was an appropriate acquisition target. While doing the research and comparing the products from a technical perspective, Overland Storage came to find that the Snap Server product line and its REO SERIES disk libraries are both based on a Linux 2.6 kernel. Another key feature was that the Snap Server already supports replication which the REO SERIES products currently lack. Because both product lines are based on similar underlying code, this opens up new possibilities for the introduction of new features across Overland Storage’s broader product portfolio. At the same time, these facts diminished Overland Storage’s interest in reselling Microsoft Storage Server since the same synergies did not exist across product lines.

Pendekanti indicated that it would be logical to conclude that “cross-pollination between boxes” would take place as the assimilation of Snap Server into Overland Storage occurs. While the plan is for the Snap Server and REO SERIES groups to remain as separate product teams, expect the Snap Server appliances to become more focused on data protection going forward. “Overland Storage’s focus is first and foremost on data protection and we don’t want to try to become all things to all people,” says Pendekanti.

Overland Storage admittedly had a hole in its product offering portfolio that it recognized it needed to close. While bringing any NAS product on-board could have theoretically plugged that gap, acquiring the Snap Server product line from Adaptec accomplishes much more. It brings new intellectual property into Overland Storage’s product portfolio that is complimentary to existing products and should help to create new synergies and product offerings going forward that its current and future customers can look forward to capitalizing on. The fact that Snap Server brings with it an existing customer base and $18 million a year in revenue doesn’t hurt the chances of this acquisition succeeding long term either.

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